Stanching the red ink in Modesto's general fund could prompt the city to skip a $953,545 payment to an employee benefit account, according to a summary of budget-trimming measures headed to a City Council committee today.
Modesto must cut $8.8 million from the $135 million it planned to spend from the most flexible account in its budget, the general fund, which pays for public safety, parks and other services.
The city faces the cuts because of a decline in several revenue sources, including sales and property taxes. An aggressive hiring program last year also left the city short in its reserves.
A first round of options offered by Finance Director Wayne Padilla would reduce the city's spending by $5.8 million and increase its revenues by $969,000.
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Padilla's options do not call for a reduction in services, though Modesto is in the midst of a hiring freeze that has delayed plans to hire more police officers. The measures on the table are:
Oblige the Modesto Redevelopment Agency to begin repaying $20.9 million in loans the city used to jump-start the agency in the 1980s and '90s. With interest, the agency owes the Modesto general fund $59.8 million.
Padilla's recommendation calls for the agency to pay the city about $500,000 a year. The agency expects to collect $5.7 million in property taxes this year. Of that, $4 million goes to debt payments for work the agency has accomplished, such as building downtown parking garages.
Modesto's redevelopment advisory commissioners have indicated they want to wait on the city loan repayments until they can complete a few more proj- ects.
But two City Council members at a Sept. 4 meeting said it might be time to call in the debt. They pointed to the agency's success in luring private investment to downtown and the city's financial troubles.
Suspend the $953,545 payment to a city fund used for retirees who continue to receive work-related benefits, such as health care. Padilla's report did not say whether this action would affect benefits.
Reduce contributions to a workers compensation insurance fund by adopting the industry standard contribution. Doing so could save Modesto $896,000 this year. Padilla wrote that the city's contribution exceeds that standard.
Increase franchise fees for Comcast cable, which could generate $750,000 a year. Comcast is allowed to pass on this charge to customers. It is 3 percent of a customer's bill; the council could increase it to 5 percent.
Require the city to account for general fund money that it's spending on storm drains. That could allow Modesto to collect the money when the city adjusts its storm drain fees. Modesto subsidizes its storm drain fund by about $877,000.
Make certain programs that get money from several city accounts pay their full overhead costs to the general fund.
This occurs in departments such as Public Works, which generate revenue from user fees and specific state sources for sewer, drinking water and road maintenance. Some of the oversight for those services occurs in positions that are paid for through the general fund.
Reclassify a $2 million loan the city transferred five years ago from its revenue-generating vehicle fleet fund to the general fund.
Padilla's report said the general fund should continue paying about $212,000 a year to the fleet fund to pay down the debt.
However, Padilla wrote that those payments should be called a "vehicle replacement charge." That lessens the debt load in the general fund but allows the city to continue replacing its vehicles through the fleet account.
The Finance Committee will meet at 5:30 p.m. today in Room 2005 of Tenth Street Place, 1010 10th St.
Bee staff writer Adam Ashton can be reached at firstname.lastname@example.org or 578-2366.